Version 1.1 adds a few usability improvements:

• a spinner is displayed while loading and saving data
• pressing escape while editing will remove the form
• pressing enter while editing a text input will submit the form

Also, it allows you to edit custom taxonomies, just like you would edit post tags. I recommend the Simple Taxonomies plugin for creating custom taxonomies.

Here is a code example:

<?php the_terms($post->ID, 'mytax'); ?>

To make it work in WP 2.8 *, you have to open wp-includes/category-template.php and find the_terms() function. Then, you have to make it look like this:

function the_terms( $id, $taxonomy, $before = '', $sep = ', ', $after = '' ) {
    $term_list = get_the_term_list( $id, $taxonomy, $before, $sep, $after );
 
    if ( is_wp_error( $term_list ) )
        return false;
 
    echo apply_filters('the_terms', $term_list, $taxonomy, $before, $sep, $after);
}

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* You don’t have to do this if you’re using WordPress 2.9 or newer (see #10600).